HIV-1 transcription and replication are regulated by both viral and cellular factors, although precise mechanism(s) defining their roles are not well established. It has been suggested that sequence-specific interaction of trans-acting proteins with cis-acting DNA elements plays a crucial role in regulating the HIV genes. Although many of the virally encoded factors have been characterized, the nature of cellular factors regulating HIV expression is less informative. Negative regulatory element (NRE) of HIV-1 LTR has been reported to be involved in the down-regulation of HIV gene expression. In our previous studies with HIV-1 infected monocytic cell line THP-1, different levels of expression were observed. Analysis of THP-1 cultures after an initial productive HIV infection revealed THP-1 culture with either latent or restricted (low level) HIV expression, as well as cultures remaining productively infected. This system was used as a model to understand the mechanism(s) of viral latency and low level expression. In vitro transcription, gel mobility shift and Southwestern assays were utilized to characterize the cis-acting DNA elements and trans-acting nuclear factors involved in the regulation of HIV gene expression. We have mapped a distinct 30 base pair DNA segment within the NRE region which specifically interacts with a DNA binding protein purified from Hela cell nuclear extracts. This purified nuclear factor (MW~38 KDa) exhibits a strong transcriptional inhibitory activity in the in vitro HIV-LTR directed transcription and gel mobility shift assays, suggesting its possible role in HIV-1 gene regulation.